porter波特五力模型详解.docx

1、porter波特五力模型详解Porters Five ForcesA MODEL FOR INDUSTRY ANALYSISThe model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitabil

2、ity; part of this difference is explained by industry structure.Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in w

3、hich the firm operates.Diagram of Porters 5 ForcesSUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost rel

4、ative to total purchases in industry BARRIERSTO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products THREAT OFSUBSTITUTES -S

5、witching costs -Buyer inclination tosubstitute -Price-performancetrade-off of substitutes BUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buye

6、rs incentives DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes I.Rivalry In the traditional economic model, competition among riva

7、l firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these dif

8、ferences.Economists measure rivalry by indicators of industry concentration. The Concentration Ratio (CR) is one such measure. The Bureau of Census periodically reports the CR for major Standard Industrial Classifications (SICs). The CR indicates the percent of market share held by the four largest

9、firms (CRs for the largest 8, 25, and 50 firms in an industry also are available). A high concentration ratio indicates that a high concentration of market share is held by the largest firms - the industry is concentrated. With only a few firms holding a large market share, the competitive landscape

10、 is less competitive (closer to a monopoly). A low concentration ratio indicates that the industry is characterized by many rivals, none of which has a significant market share. These fragmented markets are said to be competitive. The concentration ratio is not the only available measure; the trend

11、is to define industries in terms that convey more information than distribution of market share.If rivalry among firms in an industry is low, the industry is considered to be disciplined. This discipline may result from the industrys history of competition, the role of a leading firm, or informal co

12、mpliance with a generally understood code of conduct. Explicit collusion generally is illegal and not an option; in low-rivalry industries competitive moves must be constrained informally. However, a maverick firm seeking a competitive advantage can displace the otherwise disciplined market.When a r

13、ival acts in a way that elicits a counter-response by other firms, rivalry intensifies. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate, or weak, based on the firms aggressiveness in attempting to gain an advantage.In pursuing an advantage over its rivals, a fi

14、rm can choose from several competitive moves:Changing prices - raising or lowering prices to gain a temporary advantage.Improving product differentiation - improving features, implementing innovations in the manufacturing process and in the product itself.Creatively using channels of distribution -

15、using vertical integration or using a distribution channel that is novel to the industry. For example, with high-end jewelry stores reluctant to carry its watches, Timex moved into drugstores and other non-traditional outlets and cornered the low to mid-price watch market.Exploiting relationships wi

16、th suppliers - for example, from the 1950s to the 1970s Sears, Roebuck and Co. dominated the retail household appliance market. Sears set high quality standards and required suppliers to meet its demands for product specifications and price.The intensity of rivalry is influenced by the following ind

17、ustry characteristics:1.A larger number of firms increases rivalry because more firms must compete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership.2.Slow market growth causes firms to fight for market s

18、hare. In a growing market, firms are able to improve revenues simply because of the expanding market.3.High fixed costs result in an economy of scale effect that increases rivalry. When total costs are mostly fixed costs, the firm must produce near capacity to attain the lowest unit costs. Since the

19、 firm must sell this large quantity of product, high levels of production lead to a fight for market share and results in increased rivalry.4.High storage costs or highly perishable products cause a producer to sell goods as soon as possible. If other producers are attempting to unload at the same t

20、ime, competition for customers intensifies.5.Low switching costs increases rivalry. When a customer can freely switch from one product to another there is a greater struggle to capture customers.6.Low levels of product differentiation is associated with higher levels of rivalry. Brand identification

21、, on the other hand, tends to constrain rivalry.7.Strategic stakes are high when a firm is losing market position or has potential for great gains. This intensifies rivalry.8.High exit barriers place a high cost on abandoning the product. The firm must compete. High exit barriers cause a firm to rem

22、ain in an industry, even when the venture is not profitable. A common exit barrier is asset specificity. When the plant and equipment required for manufacturing a product is highly specialized, these assets cannot easily be sold to other buyers in another industry. Litton Industries acquisition of I

23、ngalls Shipbuilding facilities illustrates this concept. Litton was successful in the 1960s with its contracts to build Navy ships. But when the Vietnam war ended, defense spending declined and Litton saw a sudden decline in its earnings. As the firm restructured, divesting from the shipbuilding pla

24、nt was not feasible since such a large and highly specialized investment could not be sold easily, and Litton was forced to stay in a declining shipbuilding market.9.A diversity of rivals with different cultures, histories, and philosophies make an industry unstable. There is greater possibility for

25、 mavericks and for misjudging rivals moves. Rivalry is volatile and can be intense. The hospital industry, for example, is populated by hospitals that historically are community or charitable institutions, by hospitals that are associated with religious organizations or universities, and by hospital

26、s that are for-profit enterprises. This mix of philosophies about mission has lead occasionally to fierce local struggles by hospitals over who will get expensive diagnostic and therapeutic services. At other times, local hospitals are highly cooperative with one another on issues such as community

27、disaster planning.10.Industry Shakeout.A growing market and the potential for high profits induces new firms to enter a market and incumbent firms to increase production. A point is reached where the industry becomes crowded with competitors, and demand cannot support the new entrants and the result

28、ing increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures. BCG founder Bruce Hender

29、son generalized this observation as the Rule of Three and Four: a stable market will not have more than three significant competitors, and the largest competitor will have no more than four times the market share of the smallest. If this rule is true, it implies that:oIf there is a larger number of

30、competitors, a shakeout is inevitableoSurviving rivals will have to grow faster than the marketoEventual losers will have a negative cash flow if they attempt to growoAll except the two largest rivals will be losersoThe definition of what constitutes the market is strategically important.Whatever th

31、e merits of this rule for stable markets, it is clear that market stability and changes in supply and demand affect rivalry. Cyclical demand tends to create cutthroat competition. This is true in the disposable diaper industry in which demand fluctuates with birth rates, and in the greeting card ind

32、ustry in which there are more predictable business cycles.II. Threat Of Substitutes In Porters model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a products demand is affected by the price change of a substitute product. A products price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute